23andMe, the biggest consumer DNA testing company, was forced to file Chapter 11 bankruptcy protection last week. A company valued in the billions not long ago, they have suffered several deep crises that have led to this extreme action. The firm filed its Bankruptcy Corporation on Mar. 23, 2023 in the Eastern District of Missouri. This laundry list of a petition named 11 of its subsidiaries including Lemonaid Health that the company had purchased for $400 million in 2021.
For the company company, it’s been a stormy 18 months, characterized by sagging sales and high-profile executive exits. A major data breach further exposed the sensitive personal information of over 7 million users, forcing their bankruptcy declaration. The breach, disclosed publicly in October 2023, exposed customers’ names, birth years, relationship labels, percentages of DNA shared with relatives, ancestry reports, and self-reported locations.
To aid in the restructuring process, 23andMe is actively contacting millions of existing and past customers. Specifically, they wish to notify you that you are entitled to submit claims for your losses resulting from the data breach. The new deadline of July 14 will be the last for impacted individuals to file their claims. As it currently stands, the company is still steering through a proposed $30 million settlement for an extensive class action lawsuit stemming from that cyberattack. Despite the strong terms of this settlement, it is now stalled due to the ongoing bankruptcy proceedings.
The lightning-fast fall from grace of 23andMe’s fortunes is due to a number of reasons. Its bold move into digital health and telemedicine rapidly consumed the state’s financial resources, while failing to provide the anticipated trajectory of growth. Besides its ill-fated acquisition of telehealth company Lemonaid Health, 23andMe’s expansion into these fields was expensive and unsustainable.
The cocktail of these factors has created an unprecedentedly difficult environment for 23andMe to operate in. The future remains unclear for the company, once a leader in the field of genetic testing. It is working around the clock to restructure its operations and address the fallout from the data breach.
